17565: On Outcome-Based Remuneration Regurgitation Rhetoric.

 

Digiday reported WPP CEO Cindy Rose said, “I suspect it will take a few years” for outcome-based remuneration to take hold in Adland.

Um, it’s not the first time White advertising agencies pressed to have compensation tied to results and revenue enjoyed by brands via marketing initiatives.

Based on historical data, it will take much more than a few years. Outcome-based payment is an outdated proposition, with failed attempts dating back to the 1990s.

White holding companies—including a single White operating company—fueled the commoditization of Adland. Adding an intent to leverage AI for offering faster and cheaper services makes pursuing outcome-based remuneration outrageous.

Hell, it’s a safer bet Rose will be out long before outcome-based remuneration becomes reality—especially if her employment is based on outcomes achieved at WPP.

‘It will take a few years’: WPP CEO Cindy Rose says outcome-based pay is still years away

By Sam Bradley

 

Loud as the chatter about outcome-based remuneration is across the holdco space, the reality of it is still some way off, according to one of its most vocal proponents, WPP CEO Cindy Rose.

 

It’s a notable admission given Rose has made outcome-based pay a core pillar of WPP’s turnaround plan, overhauling how global client leaders — the senior execs running the biggest accounts — get paid, tying it directly to client growth. Getting clients to pay the same way is another matter. So far, only one has: Jaguar Land Rover.

“If you look at the history of this industry, the commercial model has been evolving for the past 40 years, and I think we’re going to have to continue to adapt because the time and materials model is probably not sustainable in the long term because AI ultimately will enable us to do our work faster with fewer people,” Rose told Digiday today (August 6) as the agency giant published its first-half earnings report.

She added, however, that Jaguar was so far “unique” in embracing the approach. “It’s going to take time for this evolution to take place… I suspect it will take a few years,” she said.

WPP’s recovery, too, remains a work in progress. Eleven months into Rose’s tenure and six months after she unveiled her turnaround plan, there are early signs from its latest earnings update that the group’s core media and creative businesses are stabilizing. To keep the momentum going, Rose said WPP would embrace a “mixed economy of business models.”

WPP’s first half

H1 revenues less pass-through costs were £5 billion ($6.7 billion), down 4.7% from the same period last year. Its creative businesses, including VML and Ogilvy, saw a 3.5% decline in revenue less pass-through costs, though its production unit saw revenue increase 1.9%. WPP Media saw revenues fall 5.4% compared with the same period last year, but Rose said higher spending from new and existing clients had contributed to an “improving quarterly trend” within the network.

Rose, who was appointed CEO last September, said the business was on track to recovery according to key indicators: new business, client retention, tech partnerships and cost cutting. Evidence for the former, she said, was in the wins for Heineken and Honda’s accounts, and retentions such as Huawei and Reckitt.

“My priority, my north star, is to get WPP back to positive organic growth,” she told analysts during the company’s earnings call. “The priority in 2026 has been to stabilize the business, make the structural changes needed, and strengthen our execution. The next phase is to build on these foundations, returning the company to growth sometime during 2027.”

The market appears to agree with Rose’s diagnosis. WPP’s share price had risen 25% following the earnings release at the time of writing.

AI plans

The company’s turnaround plan is closely tied to its AI investment and development plans. CFO Joanne Wilson declined to provide details on WPP’s token costs (the firm committed in 2024 to invest £300 million annually), but said its Open platform was a key tool for “optimizing” AI-related costs.

“We are using AI and applying it across our business. So, as you would expect, with that comes token costs… we’re actively optimizing that cost. We’ve also been very thoughtful about how we use agents across the business,” she said.

“Open is widely deployed across our business now, and our clients. We use [Open Intelligence, WPP’s AI media targeting solution] in all of our pitches. It’s absolutely front and center of our proposition,” added Wilson. 

Wilson suggested that outcome-based commercial models might provide a means for WPP to operate without absorbing all AI-related costs. “In the past, our business and values really come almost entirely from people, now it’s people and tech costs. We’re evolving our commercial model so that we’re reflecting those inputs between people and tech,” she said.

What role WPP Open Pro, the self-service SME creative tool launched last autumn, will play in the holding company’s commercial model is less clear. Rose said 24 clients were now using the tool. “We’ve got a very healthy pipeline of active client opportunities, and we’re encouraged by the progress there too,” she said.

Token costs, outcome-based models and organic growth expectations weren’t the only subplots updated this morning:

WPP’s open to offers

By the end of this year, WPP will have clawed back £200 million ($269 million) through sales of “non-core” business units, to use Rose’s terminology, and what CFO Wilson referred to as the “long tail” of agencies, during the company’s investor call. It’s quite a turnaround for a company once defined by its aggressive approach to agency acquisition.

“We identified assets in the group which are great assets, but we felt that they were of more value to the outside of the group than inside. We have initiated processes on those assets earlier in the year, and those processes are ongoing,” said Wilson, who didn’t name the agencies in question. “I would expect some more in 2027.”

Staff cuts will continue

WPP isn’t the only major agency group shedding staff at the moment, but it’s shrunk its headcount by around 8.1% in the past year. The company now employs 97,400 staffers, versus 105,900 during the first half of 2025. Though most of those job cuts fell in the second half of 2025 Rose indicated this was an ongoing project, telling reporters that “some jobs will be impacted” as the company pursues £500 million ($673 million) in cost cuts over three years. “This isn’t just about cost savings per se. These actions will make us more agile and simpler to navigate, and that’s an important part of our new simplified operating model,” she said.

Those cuts mean that WPP, once the industry’s largest employer, is now smaller by headcount than either Omnicom or Publicis Groupe, which both have over 100,000 employees. Rose argued that embracing alternative commercial models like outcome-based pricing would enable it to compete.

“Moving away from a time-and-materials model,” she said, “frees me up from staffing plans so that I can serve clients with a hybrid workforce of humans and agents, and that reduces my cost to serve, and ultimately becomes a source of expansion.”

17564: WPP Metaphorically On Track.

Adweek spotlighted the WPP H1 2026 report, indicating the single White operating company experienced a 5.6% decline in revenue, yet saw its stock rise over 26% after beating analysts’ estimates.

During an earnings call, WPP CEO Cindy Rose declared, “We’re on track with where we said we would be,” referring to the fuzzy Eviscerate28. Meanwhile, regarding outcome-based remuneration—a key notion in the turnaround scheme—Digiday reported Rose said, “I suspect it will take a few years.”

Not officially stated about WPP: The runaway train is being built in breakneck flight—ditto the rickety track it’s careening along. And upon reaching the dismal destination, there will be far fewer passengers on board versus when the dizzying trip started.

WPP Is ‘On Track’ With Turnaround Plan, as Revenue Drops 5.6% in First Half of 2026

Six months into its 3-year turnaround plan, WPP’s revenue beat analysts’ estimates

By Brittaney Kiefer

WPP’s stock rose more than 26% in the early hours of trading, after the company’s first-half earnings beat analysts’ estimates. 

The numbers

• –5.6%: Year-over-year decline in revenue less pass-through costs for the first half of 2026 to $6.39 billion (£4.75 billion), down 4.7% on a like-for-like basis 

• –2.3%: YOY decline in revenue less pass-through costs for the second quarter to $3.34 billion (£2.48 billion), down 2.8% on a like-for-like basis 

• –8.4%: YOY decline in average headcount, from 106,000 in the first half of 2025 to 97,000 in the first half of this year

• –3.5%: Decline in WPP Creative’s net sales for Q2, versus a 6.3% decline in Q1

• –2.8%: Decline in WPP Media’s Q2 net sales, versus an 8.3% decline in Q1

Watercooler talk 

WPP is six months into its three-year turnaround plan, Elevate28, which is designed to stabilize the business and return it to growth, while delivering annual cost savings of $676 million (£500 million) by 2028. Chief executive Cindy Rose is nearly one year into her tenure.

“We’re on track with where we said we would be,” Rose said on an earnings call with journalists on Thursday (Aug. 6). 

Rose said WPP made progress on its four strategic objectives, which are to deliver growth for clients, become a simpler and more integrated company, unlock the advantages of its agentic marketing platform WPP Open, and to “create firm financial foundations for the future.”

Earlier this year, WPP restructured into four business units—WPP Media, WPP Creative, WPP Production, and WPP Enterprise Solutions—across four key regions—North America, Latin America, EMEA, and APAC. For the first time, its earnings report split its results into those units.

On the new business front, Rose cited “landmark wins” including Estée Lauder, Jaguar Land Rover, Avon, Airbnb, Wendy’s, SC Johnson, and Heineken. WPP topped J.P. Morgan’s net new business rankings as number one for the first half of 2026 and for the nine months to Q2 2026.

WPP also “completed more than 15 non-core asset disposals that will generate over £200 million [$269 million] of sales proceeds in 2026,” according to Rose. The company said it is on track to make $134.5 million (£100 million) in savings this year.

While WPP is reportedly planning to cut hundreds of jobs globally by the end of this year, Rose declined to share specific numbers, other than confirming that “some jobs will be impacted.”

“This isn’t just about cost savings per se. These actions will make us more agile and simpler to navigate, and that’s an important part of our new simplified operating model,” Rose said.

Rose touted the company’s technological advancements through WPP Open, which she said allows clients to “connect their data with signals from across WPP and our 350 data partners, giving them access to 5 billion consumers in over 100 markets, drawing on trillions of real-time signals.”

Key quote

“What excites me the most is to see how AI is fundamentally changing how we deliver growth for our clients,” Rose said. “In an environment where AI is rapidly transforming our industry and trust is in scarce supply, I believe that our commitment to client data ownership and control will become increasingly compelling.” 

17563: On S4 Capital H1 P&L OMG WTF BS.

 

MediaPost spotlighted the S4 Capital H1 2026 report, indicating the White holding company continued to experience net revenue declines. Dramatic cost cutting, however, helped to ignite a profit boost.

Gee, Sir Martin Sorrell might earn the distinction of being unable to orchestrate a financial turnaround for the biggest White holding company (WPP) and his current peanut factory.

That’s quite a range of abject failure.

S4 Shares Soar 26% On First-Half Profit Boost

By Steve McClellan

Martin Sorrell-led S4 Capital continued to shrink in the first half of the year with declines in reported and organic net revenue while sharp cost cutting led to a profit boost. The firm also declared a dividend and reduced debt during the period. Shareholders applauded, giving S4 shares a 26% bump up in Wednesday trading after the release of the firm’s first-half results.  

Reported net revenue for the first half was 308 million GBP (approximately $415 million), down 6.2% with a 4.7% organic net revenue shortfall.  

S4 sited continuing macroeconomic uncertainty exacerbated by the Middle East conflict as part of the reason for the revenue falloff. Also, some clients spent less with the firm while boosting capital expenditures in artificial intelligence infrastructure. “Clients continue to be cautious leading to longer sales cycles,” S4 stated. 

But pre-tax profits were up 82.7% to a record 38 million GPB ($51 million). Cost reductions included back-office efficiencies and staff cuts. Total staff at the company was down 10.5% as of June 2026 versus a year ago to 6,150.  

The firm downgraded its organic revenue outlook for the full year, forecasting a decline in the mid-single digits versus the previous “slight dip” the company guided to at the end of the first quarter. But pre-tax profits should reach the analyst consensus of 85 million GBP ($115 million) with a profit margin increase of 1.4%.  

“We anticipate that clients will remain cautious in the near term reflecting heightened macroeconomic uncertainty, including the continuing conflict in the Middle East,” stated Sorrell. “While the macroeconomic environment remains uncertain, we see growing opportunities as clients become more selective about growth geographically and increasingly focused on implementing technologies such as AI, Blockchain and Quantum to drive efficiency.”  

The Americas, the firm’s largest region by revenue, was down slightly (0.8%), while Europe and Asia Pacific were both down double-digits.   

The company’s marketing services unit posted net revenues of 281.9 GBP ($380 million), down 4.4% organically while technology services totaled 26.1 million GBP ($35 million), down 7.4%.

17518: On WPP Media Global Ranking & Worldwide Tanking.

 

Advertising Age reported WPP Media maintained its lead global ranking; however, the trade publication foresees the White media firm losing its top position as Adland continues to dramatically churn.

 

Ironically, WPP Media could benefit from PR, promotion, and advertising—disciplines diminished in the WPP worldwide flaming dumpster—to hype its fuzzy success, suspect capabilities, and questionable innovations.

 

WPP Media clings to the lead in Comvergence’s global ranking, but likely not for long

 

By Lindsay Rittenhouse

 

WPP Media maintained its position as the top agency group worldwide in global media billings last year, but it is slipping from the leaderboard, according to Comvergence’s 2025 Global Billings and Market Share Report.

 

The holding company led the pack with 13% market share and $63.9 billion in 2025 global media billings, but that’s down from the 14.2% share it captured in 2024. Publicis Media is not far behind, posting the highest growth rate among the holding companies, with a 12.8% rise to $62.4 billion in global billings last year, per the report.

 

Omnicom Media Group ranked third with $48.5 billion in global media billings last year, which represented a 5.5% increase from 2024. However, Comvergence flagged that the report did not combine the media billings of the newly merged Omnicom Media Group and Interpublic Group of Cos., as the deal closed in late November. A combined Omnicom Media Group would have had $75.6 billion in global billings, according to the report, landing it well ahead of WPP Media.

 

Among agency networks, Omnicom’s OMD led with $26.9 billion in total media billings, up 1.7% from 2024. WPP’s EssenceMediacom came in second place with $23.3 billion, a 3.9% decline in global billings from 2024, while its Mindshare ranked third with a decrease of 5.5% to $20.5 billion in total 2025 billings.

 

Publicis Media’s Zenith and Starcom rounded out the top five agency networks, per the report, posting the highest growth rates among the rivals, at 11.4% to $17.2 billion and 9.5% to $17.18 billion in total billings, respectively.

 

The report represents 55% of global media spend, which Comvergence estimated to be at $478 billion across 49 markets, up 4.6% from $457 billion in 2024. It also covered 107 independent media agencies, which collectively account for 12% of global market share, according to the report, representing $32 billion in total 2025 billings. Horizon Media US was the largest independent agency worldwide with $7.4 billion in 2025 billings, according to Comvergence.

17464: The Real WPP Story—From An Unreal Perspective.

 

Adweek published a perspective from its resident marketing professor-fractional consultant-uninformed analyst—who, incidentally, seems open to selling his columns to any trade journal or business publication seeking pseudo thought leader content—speculating on the WPP never-ending story.

 

There’s even a disclosure-disclaimer indicating his wannabe MasterClass services are available—probably at subscription rates—to White advertising agencies.

 

The author declares the real WPP story is not about revenue decline; rather, it’s margin.

 

In recent months, WPP presumably won and retained business via low-balling tactics, but will clients eventually cough up mo’ money and pay standard costs?

 

Surely Eviscerate28 does not intend to position WPP as the bargain basement brand among competitive holding companies.

 

Yet the author—having zero real-life experience in Adland—appears to miss the true plot.

 

It’s not whether clients will pay more—indeed, it’s will clients pay at all?

 

As previously mentioned, WPP has led the commoditization of Adland.

 

Now, the single White operating company has nothing unique to provide—at any price tag.

 

The only people profiting from WPP are Monday morning marketing quarterbacks. And the most annoying are those who’ve never played in the ad game.

 

The Real WPP Story Is in the Margin, Not the Revenue

 

Despite promising around $675 million in savings, the only question that matters is whether clients will pay more

 

By Mark Ritson

 

Disclosure: Mark Ritson’s MiniMBA course has been offered to Omnicom Oceania staff. Omnicom is a competitor to WPP.

 

When WPP posted its first-quarter numbers last week, one line did all the talking. Net revenue down 6.7% like-for-like. Its key unit WPP Media is down 8.5%. 

 

The company described this performance, with commendable composure, “ahead of expectations.” Which tells you everything about the expectations now governing the big end of advertising.

 

The more instructive story isn’t the revenue decline. It’s margin. 

 

WPP’s full-year 2025 headline operating margin came in at 13%, down from 15% in 2024. 

 

Two hundred basis points in 12 months—the kind of compression you associate with recessions or category collapse, not with a company that has a turnaround strategy in-market. 

 

The Elevate28 strategy, unveiled in February, promises around $675 million in gross annual savings by 2028 at a cash cost of around $540 million to deliver. CFO Joanne Wilson told analysts that staff bonuses suppressed in 2025 will need to be rebuilt through 2026. That cuts both ways: employees get paid properly again, but the lever WPP used to protect margin last year is now spent.

 

On the Q1 call, Adrien de Saint Hilaire of Bank of America asked the question every CMO should be asking. Revenue with WPP’s top 25 clients was down low single digits even excluding losses. 

 

What drove the decline? Reduced scope of work, fee pressure, or outright budget cuts?

 

The answer determines whether WPP has a cyclical problem or a structural one

 

Scope reductions are cyclical: clients buying less of the same thing. Budget cuts are cyclical: economies contract, marketing contracts with them. 

 

Fee pressure is structural: clients paying less for the same thing. That is a different animal entirely. It doesn’t respond to patience or strategy decks.

 

The answer, given on the Q4 2025 call, from Cindy Rose herself, confirmed it was all three—and that WPP anticipates “some downward pricing pressure from AI productivity,” which it plans to offset through cross-selling and capturing more of clients’ addressable spend. Translation: fees are falling, and the plan is to win volume elsewhere in the client’s wallet to compensate.

 

The numbers make the case plainly. On a like-for-like basis, gross revenue declined 4.0%, while net revenue declined 6.7%.

 

Pass-through costs—the media and production money flowing through WPP’s books to third parties—are holding up better than the agency-fee line. Clients are still spending. WPP is just earning less per dollar of that spend.

 

WPP is winning business too: the U.K. government media account, Reckitt, Estee Lauder, Jaguar. Revenue is still falling. Winning accounts while revenue drops is the diagnostic signature of a business defending share by cutting price. Every account won on tighter terms resets the floor for the next pitch.

 

Volume losses are real. Wilson flagged a 500 to 600 basis-point drag from gross client losses in 2026, up from 300 to 400 last year. Major U.S. and U.K. accounts walked. CPG and telecom, media, and entertainment spend is genuinely weaker. 

 

Fee pressure and volume loss are not separate stories 

 

They are the same story told twice. Clients negotiate harder on price, and walk when WPP won’t move, for the same reason: the holding company proposition has lost its differentiation. 

 

Accenture Song owns the top of the funnel with strategy and tech. In-housing has gutted the middle, capturing retainer budgets clients once handed over without a second thought. Meta will take the rest. AI is eating production and media planning from below. WPP, like every big agency peer, faces a decade of simultaneous price and volume compression because it is no longer the default answer to a question only it can answer.

 

Elevate28’s $675 million in savings is a margin-defense operation—buying time while structural pricing erodes the top line. It can absorb a year or two of compression. It cannot solve what is causing it.

 

The harder task, the one WPP’s leadership avoided for a decade, is rebuilding a reason for clients to pay full price. WPP Open and the Adobe partnership are moves in that direction. Whether they produce a defensible category-of-one position, or simply make the cost reduction on commodity work cheaper to execute, is the question the market is now asking every holding company. Quarter by quarter. Pitch by pitch. Margin point by margin point.

17455: FYI WPP Q1 WTF (Cont’d).

 

MediaPost spotlighted additional details on WPP Q1 earnings, revealing WPP Media delivered the worst decline for the single White operating company.

 

This is extra bad news given pseudo thought leaders and analysts speculate WPP CEO Cindy Rose is restructuring the flaming dumpster to become a media-first enterprise.

 

Based on the earnings report, WPP is now a media-worst enterprise.  

 

WPP Media Delivers Worst Q1 Decline, ‘Enterprise Solutions’ Seen Most Promising

 

By Joe Mandese

 

Media was the biggest drag on revenue during WPP’s first quarter, the “unholding” company disclosed in its earnings release this morning.

 

WPP Media, which accounts for the greatest share of company revenue (41%, see chart below), saw its revenue decline 8.5% in the first quarter -- nearly two points greater than WPP’s overall decline and markedly greater than its other reported divisions, including creative services, public relations and specialist agencies.

 

While WPP did not disclose the explicit performance of a newer category of services – “enterprise solutions,” which now accounts for 13% of total revenue -- it was cited as a potential area of higher revenue growth.

 

The earnings report called out a recent enterprise solutions deal with Adobe as an example, but did not explicitly disclose the nature of the services or the revenue model.

 

17454: FYI WPP Q1 WTF.

 

MediaPost spotlighted the WPP Q1 earnings call, where the White holding company—er, single White operating company—reported revenue declines in line with expectations.

 

Clearly, expectations are low—albeit probably realistic.

 

WPP CEO Cindy Rose dodged the call, contrasting the attendance practice established by predecessors Mark Read and Sir Martin Sorrell.

 

MediaPost stated, “Rose will participate in the mid- and full-year earning calls, following the practice of most other UK and European public companies.”

 

Okay, except WPP is unlike most other UK and European public companies, at least in terms of experiencing dire financial straits. One would think Rose might feel obligated to appear at every earnings call to provide status reports on Eviscerate28.

 

Sadly, no one seems concerned about employees’ expectations.

 

WPP Reports Q1 Dip, In Line With Expectations

 

By Steve McClellan

 

WPP reported first quarter net revenues of 2.26 billion GBP ($3.05 billion), down 6.7% on an organic basis (excluding currency and M&A impact), in line with previous guidance from the company.  

 

The firm reiterated that it expects a first half organic revenue decline in the mid-to-high single digits for the first half of 2026 “with an improving trajectory in the second half.” The firm also stated that full-year pre-tax profit margin is expected to be in the 12% to 13% range.  

 

CEO Cindy Rose stated that the company’s latest turnaround plan unveiled in February  is “resonating with clients and driving strong new business. While it is only a few months since we unveiled our Elevate28 strategy, I am encouraged by this momentum which validates the ‘Stabilization’ phase of the plan and our path to growth.” 

 

Rose was not on the company’s earnings call, which is a departure from past practice during both the Mark Read and Martin Sorrell eras. It’s understood going forward that Rose will participate in the mid- and full-year earning calls, following the practice of most other UK and European public companies.  

 

Major first quarter wins included being named Estée Lauder’s first-ever global media partner, and media assignment wins for Wendy’s, SC Johnson and Norwegian Cruise Lines in the US. 

 

“Elevate28” is designed to stabilize the business this year, build momentum in 2027 and deliver sustained growth from 2028 and beyond.  

 

The company said it would cut costs by 500 million GBP a year to help achieve the plan. That cost saving is expected to be fully achieved by 2028. 

 

By business segment revenue, global integrated agencies were collectively down 7.4%, which the company attributed largely to prior year client losses. There was a sequential improvement from the 10%+ dip seen in Q4. PR was down 2.6% and specialist agencies were down 2.3%. 

 

By region, North America declined 7.8% due largely to prior year client losses at WPP Media and spending cuts at Ogilvy and AKQA.  

 

The UK declined 6.6%, Western Continental Europe saw a 4.7% shortfall, and the rest of the world combined was off 6.9%, driven by Asia Pacific (-8.2%). India grew 1.0% on new business wins, offset by China declines (-12.2%) on continued spending pressures and client losses. Middle East & Africa declined 11.1% on cuts to client spending caused by geopolitical strife in the Middle East.  

 

Latin America was down 3.4% and Central & Eastern Europe declined less than 1%.

17419: Sorrell Subscribes To Payment Scheme.

 

Digiday reported S4 Capital CEO Sir Martin Sorrell is seeking to move clients from billable hours to subscriptions.

 

In recent years, White holding companies and White advertising agencies have been generating the most creative work in accounting departments, finding innovative ways to cook the books.

 

So, it’s no surprise Sorrell—who has always been a financial schemer—would pioneer in payment ploys.

 

Being a pioneer, however, has not yet made Sorrell a profiteer. He might soon concede to work for peanuts.

 

“It’s about change management”: Sir Martin Sorrell says the billable hour is dying, but getting clients to move in is proving harder

 

By Seb Joseph

 

Yes, outcome-based pay is en vogue. But none of it matters if agencies aren’t using AI at the scale the economics require. And that only happens if clients are willing to pay for it. Most aren’t.

 

S4 Capital CEO Sir Martin Sorrell said as much on his marketing group’s latest earnings call yesterday — a cold dose of realism about the hype that comes after the billable hour. For S4, the answer is subscriptions: fixed annual fees bundling senior talent with agentic workflows, brand-specific knowledge bases and quarterly software-style upgrades. 

 

Sceptics call it the agency retainer rebranded. Believers see it as an on-ramp to a world beyond the billable hour. The truth is probably somewhere in between — at least for now. The reasons are outlined [elsewhere], but Sorrell’s own framing cuts to it. 

“The far more important thing is, what is going to be the pace of AI adoption?,” he told analysts on the call. “Because the simple fact is, consumers have adopted AI faster than companies, and companies aren’t doing it because it’s not just about technology or workflow — it’s about change management. And companies find it difficult to do that.”

 

The ones that do are buying into subscriptions. One enterprise client signed up last year and restructured its entire agency relationship around the model. Three more are in discussions with more expected to follow since subscriptions are now baked into every new business pitch S4 runs. By year-end, it wants a quarter of its revenue running that way.

 

Getting there is another matter. For subscriptions to work at scale, a lot has to align: existing clients have to be willing to reopen contracts; procurement teams have to get comfortable pricing outputs rather than hours; rising inference costs have to stay absorbable within a fixed fee; and the pace of AI adoption across the broader market has to quicken. None of those things are moving as fast as S4 would like.

 

“I don’t think anybody in marketing procurement teams is against a change,” said Wes ter Haar, co-founder of Media.Monks and executive director at S4Capital on the call. “Everybody understands that the traditional model really isn’t sustainable in any meaningful way, but doing this at scale in a running business is not the easiest thing to do.”

 

There are, however, pockets of momentum. Chiefly, in automotive and financial services — sectors pushed by existential threat rather than enthusiasm. Chinese EV competition in one case, fintech disruption in the other. FMCG, arguably the most valuable category for marketing groups, is starting to stir too. And counterintuitively, the conflict in the Middle East could accelerate things further: if its reverberations push inflation higher and keep rates elevated, that macro pressure may yet do what enthusiasm alone hasn’t: force the kind of AI adoption at scale that makes the new model viable.

 

“It may be that that acts as a catalyst,” Sorrell said on the call. “If global growth slows, inflation rises and interest rates are stickier — which seems to be the scenario already being built in by some of the analysts and the investment banking firms — that might be the engine for increased tech adoption and AI adoption.”

 

Should that happen, it might finally give the agency model’s critics pause. So far, nothing has — not the workforce automation, the M&A, nor the push into agentic services.

 

Or as as Gartner vp analyst Jay Wilson, put it: “More advanced client-side organizations are starting to pivot to enterprise-wide platforms from the hyperscalers — and the agency AI platforms, which are basically just connectors of Salesforce and Adobe and Workfront, we don’t believe are going to be as relevant going forward.”

 

Which is why the subscription model’s internal economics matter as much as its commercial logic. The pitch to clients is simple: as AI improves, they get more for the same price. Fifty assets a month becomes seventy, no fee increase. But that only works if S4 can keep absorbing rising compute costs inside the fixed fee. With video models and always-on usage expanding fast, pass-through costs may eventually be unavoidable. That would mean variable pricing — the one thing procurement teams are least equipped to sign off on.

 

“On personalization at scale, I would say there’s more opportunity,” said Sorrell. “But on visualization and copywriting, we’re seeing compression — if you charge on time, that is compressed.”

 

As it stands, it’s the latter two where most AI work done at scale is happening. CMOs, despite what they say, see AI more as an efficiency play than an effectiveness one — technology to get things done faster and cheaper, not necessarily better. AI only compounds for a marketing services company like S4 if it can do all three. Without the effectiveness part — the bit where real outcomes can be pegged to results — the agency model becomes an even slipperier slope to commoditization.

 

How S4 got to this point is a sobering illustration. The group reported revenue of £754.8m for 2025, down 11% on a year earlier, with net revenue falling 10.8% to £673m. Nearly half that revenue historically came from big tech — but marketing spend at Amazon, Meta and Alphabet has been essentially flat since 2022, while their AI infrastructure spending has grown over 133%.

 

Tech clients spending more on AI and less on agencies: that’s the burning platform behind S4’s model shift, and the reason subscriptions are no longer just a commercial experiment.